Category: Advanced questions

Summary: As we seek a competitive advantage and to better serve our customers we come across concepts that seem nice, but might be difficult to implement or fit together: Customer Relationship Management (CRM), Knowledge Management, Customer Service. To help us cut through the jargon we can use our customer’s perspective on our product, which has been changing thanks to the web.

The subject of CRM, Knowledge Management, and Customer Service has been knowledge about our customers, we can sum up how they have been generally used:

Tool or function.

Knowledge Management.

Customer Relationship Management.

Customer Service.

Actual use.

Gather and distribute staff knowledge about customers.

Mine data to learn about customers.

Deal with customers after the purchase.

Goal.

Efficiency, sales.

Improve customer loyalty.

Solve post purchase problems, complaints, warranties.

All of these tools and functions are useful, although their actual benefits might not match their grandiose names; CRM for instance has been synonymous with loyalty programs, not actually managing entire relationships; and customer service is a euphemism for solving whatever problem the customer has after the sale.

We should also point out that these projects may imply substantial investments and their return might take some time, depending for instance on our product sales cycle (buying toothpaste is a matter of months while a refrigerator takes decades, so hanging on to that loyal customer might not be easy).

Our own customer’s knowledge about our product helps us see that their experience can be much broader and deeper than what Knowledge Management, CRM and Customer Service cover:

With a simple web search our customer can find not only the best, but how other consumers have fared in the long run, and discover the myriad components that make up not just a product but the entire experience surrounding it: What’s the best quality? Which are the essential components? Which are nice to have but we can do without? What should we avoid?

Our customer can also contribute to other consumer’s quests: whether staff is rude or courteous, warranty responses quick or not, which products have worked out better in the long run, if a price is fair…

The difference between what we know about our customers and what our customers themselves know about our product is crucial.

We could give the tools that help us deal with our customer’s perspective a new name, such as Customer Knowledge Management, but that would miss the point, which is that we need to think and act according to the much bigger customer experience that encompasses all these tools. Marketing has long identified all the parameters that make up our product’s value, but seeing it from our customer’s perspective lets us answer the hard questions:

Is our customer loyal? Can loyalty be bought with bonus points or are we confusing it with something else? Are we selling our customers and ourselves short?

Does our customer appreciate our product’s quality and attributes? Or do we need to keep enticing him with lower prices? Is our in store staff prepared for our customer’s wider questions?

Does our customer appreciate a better experience, such as faster turnaround, efficient service, and how much is he willing to pay for it?

What are the limitations of CRM, Knowledge Management, Customer Service and traditional advertising for the greater customer experience?

We can already draw several lessons:

For the first time we have the means for our customers to tell us directly what they are looking for, what they are and are not finding, as opposed to indirect means like data mining, our staff’s interpretation of what customers want, or biased surveys.

We need to see our customers’ greater experience as an opportunity for growth and innovation, to complement the efficiency and loyalty goals for Knowledge management, CRM and Customer Service. This can help us put these programs in perspective, particularly when we are in need of growth and not just internal process improvement.

We need to use the same medium our customers are employing to expand their experience: the web. This means thinking beyond our own stores or distribution channels, beyond the moment of purchase and more about everything that leads to it and everything that happens after.

To meet our customer’s new expectations in their expanded experience through the web we need to take several actions:

We need to be more proactive to engage more proactive customers. The web is the only mass medium that lets us be a direct counterpart in our customer’s conversation.

We need to give our customers the proper incentives to contribute and make them feel appreciated when they do so. We also need the right tools and incentives for our own staff to use our customer’s contributions.

We need to change our mindset to see our customers as active agents and not just as the recipients of our actions, as information partners and not merely as information sources. This might be the key to everything else and may require it’s own plan to keep it from becoming an empty slogan.

We need to expand our data mining through the web beyond what happens at the store to feed CRM and Knowledge Management systems, while keeping our customers’ privacy concerns in mind and their information safe; the opportunities of the wider customer experience go beyond merely attempting to track our customers on the web.

We also need to take into account the fact that customers might know more about the experience surrounding our product but they are not product or market experts, following them blindly might lead us to Homermobiles.

CRM, Knowledge Management and Customer Service are all useful and necessary, but their traditional uses respond to a more narrow, inward looking view of our customer’s experience, which has been expanding thanks to the web. We can use our customer’s wider experience as a focal point, to understand what each can contribute, as well as how to use the web itself to engage our customers.

The web is all around us, we use it daily as consumers and yet its use by our companies and organizations still leaves much to be desired. To fulfill the web’s promise we need to step back and look at its use by our customers, as opposed to the technology and design behind it, to see how we can improve our participation in it.

Our customer is looking for a set of earphones or headphones; where does this quest take him, what products does he end up with? Could he have done better? Is his path filled with uncertainty and hassle? How much does he enjoy the final product? In the old mindset, all of this is “his problem”; in the new mindset, it is a series of opportunities to compete on a better outcome and improve the experience for our customer at every step; and the web lets us meet our customer at each of these steps.

Our customer ends up with a set of earphones which don’t quite fit his ears, listening to poorly sounding music from his phone; he isn’t sure of having made the best purchase and pretty soon stops listening and leaves the earphones on a shelf, to be forgotten. In the meantime there are earphone tips which would have made them more comfortable, digital players which would have made the most of the music files, music which would have knocked his socks off; and all their vendors are missing a sale. In the old world this would be the end of the story; in the new world he will leave comments at the store’s and the brand’s websites: “Don’t bother, it’s not worth it”; and at a stroke the brand will have lost thousands of potential customers, not just this individual’s future purchases.

The lesson is that the very first step for any web project is to ask ourselves: Where do we want to take our customer? For companies with established brands, the question becomes: just how much are we really fulfilling our brand’s promise? We are talking about the breadth and depth of our customer’s experience with our product.

Following Theodore Levitt’s classic 1960 HBR article “Marketing Myopia”, the earphone brand isn’t in the earphone business, but in the “sheer pleasure from music” business, or in the “make workouts less boring with music” business; the digital camera manufacturers are in the “get that perfect shot while on holidays with the family” business or in the “help me see if this photo hobby is for me” business: the idea is old, but the web makes it all the more possible, and all the more pressing because our customer is closer to that expanded definition of our product.

The second step is to establish a way to generate insights into our customers to answer that basic question. Who has that knowledge? How can we collect it, understand it, use it? This implies a cultural shift because we can only answer these questions from our customer’s perspective instead of seeing him as the source of all our problems.

This cultural shift might be a deeper problem than you think, as we might have lavished on our product’s design, spent years perfecting the engineering behind it, countless resources on our supply chain… Only to have the wretched customer “holding it wrong“.

This second step involves another cultural shift because we cannot ask specific results from whoever is in charge of generating insights: it’s a learning process and we’ll know what to do with the insights only once we have them. Some people don’t have the temperament to work outside of an established framework, some companies aren’t structured to invest in results that aren’t applicable in the shortest of terms, some executives don’t have the time to stop and think, office politics might get in the way… But the insights are still necessary to proceed, and whoever is able to produce them will have a competitive advantage, so we need to find a way; those insights might also be a required ingredient for other projects such as CRM. The solution I suggest is to establish a “Web Lab” which builds a map of our customer’s experience and produces specific web solutions, some of which might be very simple and easy to implement.

The third step once we have those insights and establish a few web solutions, is to understand the resources required to implement them. The good news is we will have already made the biggest and most difficult investment, namely those customer insights. We will also be in a position to establish which resources are the most important, what we can do with what we have, which resources need to be cultivated internally and which need to be outsourced, and specific requirements for external suppliers.

It would help if we followed a web methodology which establishes a specific flow for our projects, from our goals and solutions as defined in a content strategy, to the information architecture, usability and programming requirements; while these may sound daunting to the uninitiated, it is much easier and quicker to implement for the respective specialists with good requirements, and a lot can be done with available and even free or very cheap technology.

As consumers the web is expanding our horizon and our expectations; if we invest in understanding our own customers’ path we can use the web to improve their experience around our product, expand our sales as well as our profit margins, and have a competitive advantage.

Customer Relationship Management is technology with a great promise that remains largely unfulfilled; understanding why and drawing parallels with our use of the web can help us use both better.

My initial feeling about CRM was that its results remained limited because of the difference between its business applications and its implementation by IT departments; this is part of the problem but the biggest one can be seen as yet another case of putting the cart before the horse: we need to first define what we mean by CRM and how we can use it, and only then look for CRM technology.

In the words of Maklan, Knox and Peppard in “Why CRM fails – and how to fix it“, we need to think of the marketing capabilities we need first, and only then look at the investment in CRM technology that can support them; it has usually been the reverse, installing the technology and then somehow hoping that our customers will appreciate the effort and reward us with more loyalty. We have been guilty of thinking of CRM as an end in itself, instead of as a tool that supports our actual relationship with customers.

The same idea applies to the web: if we don’t establish first how it affects us and how we want to use it we will fall on its defaults, be it popularity for its own sake, the latest fashion (Twitter, Instagram, Chatroulette, etc), pretty websites no one uses, or annoying our customers with ads.

To generate the marketing capabilities we need the authors in “Why CRM fails” suggest a framework based on four capabilities and three forms of marketing relationships, as illustrated in the following table (this is my interpretation):

Maklan, Knox and Peppard exemplify marketing capabilities with a company that discovered a few of its customers had an effect on many others (their “followers”), so taking them from “transactional marketing” to “one on one marketing” would have a positive effect on sales, and this is a specific goal for CRM which requires a specific investment.

The approach I suggest for the web complements this framework by looking for specific customer insights according to the biggest opportunities to improve our customer’s experience with our product, as part of their “quest”, first in general according to our brand’s promise, and then at each step, from when they look for our product, to when they purchase it, to when they use it.

As with the marketing capabilities framework there is no magic bullet, we need to generate these customer insights ourselves, they can help us establish specific opportunities and solutions on the web, as well as specific CRM opportunities and the tools we need to support them; we cannot ask our web vendors or our CRM vendors to generate them for us, even when they follow “best practices”.

The ability to learn and experiment to generate these insights will surely be a clear competitive advantage. The good news is this investment in customer insights now has at least two forms of payoff, on the web and with CRM.

To give us a better idea of how we can use the web more effectively we can look at its impact on our business through the classic Marketing scheme, as illustrated in the table below; in this first part we’ll be looking at the effect of the web on our customers (for consumer goods).

Analysis: 5 Cs

Value creation

Capturing value (delivery and communication): 4 Ps

Maintaining value

Customers

Market segmentation

Products and services

Client acquisition

Company

Select target market

Promotion

Client retention

Competitors

Product and service positioning

Price

Collaborators

Context

Why does our customer buy our product? How does he choose among products? Where does he buy it? These are age old questions which the web is changing as consumers are finding more answers about our products, mostly from other consumers, and because of their exposure to products and prices from around the world.

Cultural, social, personal, psychological impact.

As a mass medium the web is a source of general news, entertainment, a work tool, and is used for personal communication. As such the web is changing our customers’ knowledge of what can better satisfy their needs, as well as their aspirations. They are exposed to other products, other cultural perceptions of our product, can find the latest fashion before it is retransmitted by their local media. They can now belong to online communities for their hobbies or life styles which may go beyond what is available locally; and their own experience is useful to other consumers.

During their search they are also exposed to worldwide prices, which has an impact on their views about ours: Are they perceived as fair? Too high? Are they comparing the same products or services? They also develop views on the difference between what’s available locally and elsewhere: are the same products available? Are they available at the same time? If not do they feel treated as second class customers?

The moment of consumption also has an influence; I define this as the relationship between disposable income and consumers’ aspirations. For instance in a society which has little experience with general consumption aspirations will gravitate towards personal rewards and marking social status by showing one’s wealth; on the web this is confronted with other consumption moments, for instance one in which health and respect for the environment are appreciated, while social status is shown through craftsmanship, as opposed to mass produced products.

Language plays a role in keeping consumers in their silos, with english as a lingua franca that carries the cultural message mostly from the US and Western Europe, but now anyone from the cultural periphery can have a big impact if they choose their language and audience well.

To make sense of the influences of the web on our customers we need to establish the impact on their expectations, on our brand promise and on our delivery of that promise at each stage of their consumption experience, for the different segments we serve. We can already derive a few general lessons for our marketing:

Our brand promise needs to adapt to our customer’s evolving expectations, and we then need to fulfill this new promise.

We need to participate in our customer’s quest by responding, being relevant and useful, showing the way, earning their trust.

Our customers’ experience when they search online can be richer, which can work to our advantage if we want to compete beyond prices, as they are able to better understand the different product attributes, everything that is required to satisfy their needs, and even its social symbolism. We need to compare this possible richer experience with the one customers are currently having (do they only buy mainly on price?).

Our customer’s path generates information which is itself useful to other customers and may thus be highly valuable to us.

Traditional media which push messages at our consumers and are not part of their search have a limited impact on their purchase decisions, particularly when consumers have learned to tune them out; and this applies to old school ads on the web itself, which can also be easily blocked on their browsers and apps.

Digital, Internet connected, viral, social media which isn’t relevant to our customers quest is of little use to us; it may be preventing us from seeing the bigger picture and diverting precious resources.

The danger is that we find ourselves out of loop with respect to our customer’s expectations; the opportunity is first to be part of this conversation and align all our contact points, from the web to our brick and mortar stores, and second, to help our customer have a more productive, interesting, even fun experience with our product.

In conclusion: As marketers we have the opportunity to make a better contribution to our company’s results by using the web more effectively. The web allows us to have a direct, personalized communication with our customers, and in many ways takes us closer to the primary mission for marketing; the other side of the coin is that our customers increasingly expect more relevant, quicker answers, which other media cannot help us provide.

To do this we can take three steps:

Set our own expectations by taking a step back to understand how the web is changing our customer’s experience and expectations and how we can use the web itself to improve them. This will also help us decide on a budget and or marketing mix with other media.

Set our company’s internal expectations by uncovering specific opportunities and their web solutions, and establishing how stakeholders are affected by them.

Understand the resources required for web solutions, including a web project methodology which takes into account the functional differences between the web and other media.

We previously saw how the web is changing the notion of a premium product, but what if our strategy implies not being a premium provider? For instance premium might have negative connotations for our customers if we serve a segment within a specific income bracket, being synonymous with “expensive”, “a luxury we can’t afford”, and might make our customers avoid our stores or our products.

In the same vein Apple might have found that growth prospects in the smartphone market are better for sub $300 USD products or phones with bigger screens, none of which it was offering at the time.

The change in expectations still applies and we still need to use the web to respond to our customers, as their experience with our products begins online before they visit our physical store. Our customers may not be thinking “premium” but will appreciate answers to their queries, help in finding the right product, finding it more quickly, understanding the product attributes more important to their needs, the options required to achieve their objective – all of which works to our advantage to stop competing mainly on price. As a mass medium the web may provide us with the opportunity to compete on the experience surrounding our product at an affordable cost for a low or medium market segment.

The other side of the coin is that what might have seemed like premium before may not be premium in our customer’s mind anymore, and the difference between what they expect and what they are (or aren’t offered) will be perceived as a hassle, as inefficient.

The change in expectations might even have implications in the way our customers use our physical stores, for instance if during their online experience they grows accustomed to finding products quickly and following a certain logic (sports apparel>men’s>training>shorts) without having to ask for assistance, and our store’s organization doesn’t make sense to them (new>diving equipment>last season’s>women’s.

The perception of being a premium provider may work against us and it’s a great sign if we can adapt to our customer’s expectations by changing our positioning; but we need to go further and not fall for the trap that would take us from a particular disposable income to generic lower priced products, particularly when our customer’s expectations are changing through their use of the web, and when we have the opportunity to differentiate ourselves in a cost effective way by making our customer’s experience more productive, fun and less risky.

As competition in cheaper and more generic products gets more intense we might feel the need to make our offer more premium. How can the web help?

We can define a premium product as one clients appreciate for its performance, quality, design, a particular style that appeals to them, reliability, durability, the expertise required to produce it, as a social symbol. The emphasis is on the customer’s appreciation and expectations of the product, more than the product itself, even if it does have to conform to certain standards.

In the old days understanding, appreciating and finding such items was a luxury available to few, not just because of the price, but because of the knowledge of where to find them, the trust earned by such brands and shops and the expertise and time required to help us find the best.

Today consumers have new avenues of discovery by contacting other consumers on the web. While not all consumers are necessarily product experts, and some may be biased (they might for instance recommend a brand simply because it’s the one they bought), they do offer valuable information previously difficult to come by, such as real usage experience of the product: it is all very well if a brand or shop tells us that it’s the very best, but will it survive our particularly damp environment? Is it prone to breaking? Will it look different under different lighting? There are a myriad aspects surrounding a product which consumers look for and are now able to get answers for.

Customers’ needs may not have changed, products might be the same, but the ability to uncover all these relevant parameters is changing our customer’s experience with and expectations about our product; it follows that the very definition of what is premium is changing.

To use the web as an advantage it is precisely in these conversations that we need to be participating. Seen from this perspective what’s so startling is the almost complete absence of brands from the online conversation. Consumers are finding answers on forums, fan pages, even blogs, simply because that’s where they can find some answers, because with millions of consumers connected someone will know the arcane details of how to clean a fountain pen, why the last button on a jacket is not used, who makes the best coffee in town; we do need to be careful not to confuse the current use of these media as the only way to deliver answers.

How can we participate? We may think of our web vehicles, such as our brand website, as a “super marketer” that interacts with customers on a one to one basis; this requires specific objectives, specific policies (for instance how to deal with trolls), even a specific tone; we could also break down the complete experience into smaller pieces and think of each as a “game” in which we seek to help our customer achieve a better result, such as appreciating the engineering behind a product, feeling good about his choice, even establishing the value of his online experience as a point of reference for other customers.

At the heart of what the web can do for us is the idea that our customers can do better, we can help them get there and use this as a competitive advantage. The biggest change isn’t technological but a mindset which we can illustrate by comparing where we want to be (“New”), vs where we are today (“Old”).

New

Old

Discover the best worldwide.

Stuck with whatever's available locally, whether it's good or not.

Discover all that is required to fulfill our need.

Incomplete picture.

See how all that is required is connected.

Stuck with unconnected bits.

Several options.

Few options.

Productive search.

Frustrating search.

Fun search.

Hassle.

Transparent, open.

Opaque, closed.

Available whenever we need it.

Available at specific hours.

Sales staff on our side.

Sales staff indifferent, trying to sell what's more expensive.

Knowledgeable sales staff.

Sales staff doesn't know the product, can't understand what we are trying to achieve.

Our customers’ expectations are changing as they are able to connect among themselves and get better answers to their questions. The web has enabled this change and can also help us meet the challenge; at the core of our response is our relationship with each and every customer as well as our online corporate personality.

Let’s follow our customer’s quest, comparing her expectations with the response she is getting from brands. At the very beginning, our customer has a set of needs which she expresses in her own way; she is not a product expert so she doesn’t know exactly what is best for her, what she should be looking for, what’s a reasonable price, in fact she may not even be certain of making the right questions.

With her new web powers she is able to fire off a few search queries which may result in some answers, depending on her language, the topic at hand, and how many other consumers have made the same questions before. The responses she gets from companies are ads and “marketing speak” which she has been conditioned to ignore from years of watching TV or reading magazines, and she gets more useful responses from other consumers, even if they don’t directly address her questions.

If she is brave enough she might even sign up on a forum, ask a question directly, and get different types of responses: some will chide her for even asking, others will offer what they see as the obvious choice (what they themselves have bought), and a few will try to be useful. In so doing she refines her quest.

She then decides she’s done enough research and goes to shops which sell the product she is looking for. Talking to the sales staff she quickly realizes she knows more about the product than they do, and that beyond price promotions and the latest models they are unable to help her further refine her own quest and decide what is best for her. Sales staff may have the very best training, the best motivation, the best of intentions; they are simply out of sync with the customer, who will only go to their shop once (a) she’s tired of searching, (b) needs to solve her need even if she’s unsure of what’s best for her or (c) finds going to more shops a hassle.

The important bit is the difference between our customer’s new expectations and the response – or lack thereof – that she is receiving. Our customer now knows more about the products that may satisfy her needs, but she is also more frustrated, has the feeling that she is missing out on better options, and isn’t finding answers from us; this is what we urgently need to address.

Beyond reacting to our customers we also need to engage them, to propose solutions, to be a player on equal footing, otherwise we run the risk of always playing catch up. The prizes are well known to progressive CEOs around the world, we want the long term relationship, the loyalty, the good referrals, but these need to be earned on the web by being relevant, useful, by investing in goodwill and trust. This is hard work and there is no magic formula, but it also takes us back to a more primordial meaning of marketing, in which we know our customer, we understand what she’s looking for, we are on her side, we know what’s best for her at this precise moment, at her budget, we can show her the end result of her quest and how to get there, and we can even get out of the way if needed. The future is here.

With increased global competition it can seem that options for businesses are limited, beyond stepping up R&D with the implicit risk and limited ROI, integrating price discounts into the overall strategy, packing up and moving to lower cost countries… Or buying up the competition. And yet seen from another perspective there remain many opportunities available.

Think of the typical small business purchase of computer equipment: the consumer has a specific need (a new employee needs a PC), goes to a few retailers… And is faced with a wall of unintelligible technological terms which only confuse him (Four cores! 3.2 Ghz!), and price promotions (20% off!). In the end the customer is none the wiser as to which one is best for his business: it might be cheap, the technology might be super, but is it worth it?

The typical reaction by the consumer is to ask a technology savvy friend (a.k.a “the geek”) who will ponder the different processors, hard drive space, memory and half heartedly make a recommendation. But here’s the catch: the consumer’s needs are not about technology, but about the use of technology: Will it be easy to use? Will it have everything that is needed, from programs to energy protection? Will it help us work better? Will it be reliable? WIll it be durable? The customer doesn’t express these needs, his geek friend cannot help with them even if he did, and brands are left competing on price, newness and razor thin profit margins. Everyone loses compared to a situation in which brands responded to the customer’s actual needs.

Other markets may not be as dramatic but if we follow our customers’ quests and establish the end result they achieve we can realize there is usually a better possible outcome and a better experience along the way, which our customer can appreciate and be willing to pay for. In fact that better outcome might be exactly what our brand promises, but then we need to ask ourselves to which extent it is fulfilling that promise and how much room there is for improvement. This isn’t a critique of manufacturers and retailers, it may simply reflect the limitations of traditional advertising based marketing, but is intended to show the opportunities to compete on improving the actual value for our customers, which would let us move beyond competing on prices.